Minimum table, slot revenue requirement of MOP$45.6 billion for 2023 reflects government’s lack of optimism: expert
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The Macau government last week announced its limit on the total number of gaming tables and slot machines to be permitted citywide in 2023, as well as the minimum revenue levels they will be expected to provide. While these numbers are generally seen as reasonable given the current economic climate, industry experts also believe they reflect a distinct lack of optimism from the government about future gambling revenues.
As reported by Inside Asian Gaming, the Chief Executive of Macau, Ho Iat Seng, announced Friday that from 1 January 2023 the number of gambling tables in Macau will be limited to 6,000 and number of gaming machines to 12,000. Minimum annual gambling revenue per table for the purposes of Article 20 of the new Macau gaming law has been set at MOP$7 million (US$866,000) and per gaming machine at MOP$300,000 (US$37,000).
This equals almost MOP$20,000 (US$2,475) per table, per day, and around MOP$820 (US$101) per machine, per day, and sets the government’s minimum revenue target for 2023 at MOP$45.6 billion (US$5.6 billion). GGR reached MOP$292.5 billion (US$36.2 billion) in 2019.
Veteran gambling practitioner Lam Kai Kong told IAG this week that daily table revenue of MOP$20,000 is reasonable.
“This year’s gambling revenue will be very poor and will not even reach MOP$45.6 billion, but if there is no closure and pandemic next year, it is basically no problem to reach MOP$45.6 billion,” he said.
However, Lam believes the government’s MOP$45.6 billion minimum requirement, indirectly reflects that the government is not optimistic about next year’s expectations.
“If the six casino concessionaires fail to reach MOP$45.6 billion in gambling revenue next year, it is obvious that there will be serious losses. If the government sets the limit too high, it will affect the confidence of the current bidders,” he said, referencing the ongoing re-tender process for new Macau gaming concessions.
The Macau government had previously estimated that gambling revenue for both 2021 and 2022 would be MOP$130 billion (US$16.1 billion), but it reached just MOP$86.9 billion (US$10.8 billion) in 2021 and will fall well short of that in 2022, forcing the government to dip into its reserves to cover the shortfall. The Basic Law stipulates that fiscal reserves must be “kept within the limits of revenues”, which means gambling revenues needed to reach MOP$130 billion in 2021 and 2022 to meet government expenditure.
Lam said concessionaires also need revenues to reach MOP$130 billion for them to generate a profit.
Table revenue accounts for close to 95% of Macau’s total gambling revenue, based on 2019 levels, so if this calculation is based on MOP$130 billion in gambling revenue, MOP$123.5 billion would need to come from tables. This would require each table earn MOP$20.58 million per year.
However, with the number of VIP tables accounting for 20% of the total number of tables in 2019, it will be difficult to achieve MOP$123.5 billion in gambling revenue from 6,000 primarily mass tables alone unless the tourism market returns to something closer to 2019 levels.
